Dec. 7, 2007 Presentation to the annual All Hands Meeting of Silicon Valley General Counsel Association

1. Wilson Sonsini Goodrich & Rosati
PROFESSIONAL CORPORATION
Select Antitrust Issues for
Technology Companies
2007 All Hands Meeting
Chris Compton, WSGR
December 4, 2007

2. Wilson Sonsini Goodrich & Rosati
PROFESSIONAL CORPORATION
Antitrust Highlights 2007
 And Now, the News
 Europe: The New Global Antitrust HQ
 The Supreme Court Rediscovers Antitrust
• Key 2007 Supreme Court Decisions
 Resale Price Maintenance after Leegin
 Other Issues, Q&A
One man’s news is another man’s troubles.
Finley Peter Dunn, Observations by Mr. Dooley (1902)

3. Wilson Sonsini Goodrich & Rosati
PROFESSIONAL CORPORATION
And Now, the News
 Jan. 17: EC investigators ask Neelie Kroes to formally
charge Intel re alleged coercive tactics with customers to
foreclose AMD
 Jan. 24: FTC Scrutinizing Private Equity Investments:
Consent Decree in $ 22 billion Carlyle Group/Riverstone
acquisition of interest in Kinder Morgan
 Feb. 2: Final FTC Order in Rambus, setting maximum royalty
rates on DDR SDRAM and SDRAM due to standard setting
abuses.
 Feb. 5: Final FTC remedy order in Rambus. Appeal by FTC.
 Feb. 9: Investment banks subpoenaed after B of A strikes
leniency deal with DOJ, Feb. 9th
(bid rigging in municipal
derivatives industry).

4. Wilson Sonsini Goodrich & Rosati
PROFESSIONAL CORPORATION
News, 2
 April 2: Antitrust Modernization Commission Report
 April: EC investigating Apple deals with music labels that
restrict commerce across national borders. Not to mention
the tying of iPods and iTunes (French challenge)
 April: DOJ/FTC Report on IP Rights and Antitrust
 May 3: Marine Hoses Cartel arrests by DOJ, European raids
 Aug. 30: China enacts Anti-Monopoly Law
 Sept. 17: European CFI Decision vs. Microsoft.
 Oct. 22: Microsoft Caves

5. Wilson Sonsini Goodrich & Rosati
PROFESSIONAL CORPORATION
Europe: New Global HQ for
Antitrust Enforcement
 Newly emboldened, even re US companies
 Focus on Technology, Telecom
 Art. 82 Abuse of Dominance
 Bias toward protecting competitors
 Merger Control, with national agencies
 Cartel enforcement, coordinating with US, et al.
His chief hate was Washington bureaucracy; second to that, liberals;
then cops. Jack Kerouac, On the Road (1957)

6. Wilson Sonsini Goodrich & Rosati
PROFESSIONAL CORPORATION
. . .while the DOJ Fights with Europe & the
FTC, and Does Cartels
 DOJ’s highest priority
• Particular focus on international “cartel” activity
• Last decade: Billions in fines, dozens of jail terms
 Post-Enron “whistle-blower” hotlines
 DRAM (2002-2006)
 SRAM Investigation now underway
• Expect major criminal activity involving the DOJ and
allegations of price-fixing in China
 Others: E.g., airline freight, marine hoses
 EU active too
• In first 4 months of 2007, 2 billion euros in fines

7. Wilson Sonsini Goodrich & Rosati
PROFESSIONAL CORPORATION
The Supreme Court Renews its Affair with
Antitrust—but Finds it Unappealing
 Predatory buying: Weyerhauser.
• Decision Feb. 20, 2007: 9-0, Court reversed 9th
Circuit and
applied tighter Brooke Group test for liability.
 Pleading Sherman Act conspiracy: Twombly v. Bell Atlantic
Corp. (5/21/07).
• Need to plead more than parallel conduct.
 Antitrust immunity in markets regulated by SEC: Credit
Suisse First Boston Ltd. v. Billing (6/18/07)
 Vertical price fixing: Leegin (6/28/07)
• Overturned Dr. Miles per se rule for resale price
maintenance.

8. Wilson Sonsini Goodrich & Rosati
PROFESSIONAL CORPORATION
Resale Price Maintenance after Leegin
May we now abandon MAP and other
artificial devices?
Without some dissimulation, no business can be carried on at
all. Lord Chesterfield (1749)

9. Wilson Sonsini Goodrich & Rosati
PROFESSIONAL CORPORATION
Resale Price Maintenance
(vertical price fixing) 1911-2007
 You cannot agree with a distributor/reseller/licensee on the
resale price to be charged customers
 Minimum (never) or maximum (sometimes)?
 You can:
• Set prices unilaterally (Colgate)
• Suggest prices
• Control pricing by agents/brokers/consignees
 Same issues apply to MAP and Co-op Advertising programs
 Policing can lead to collusion among resellers
 Bigger problem if you compete against your reseller too!

10. Wilson Sonsini Goodrich & Rosati
PROFESSIONAL CORPORATION
The Leegin Decision
 5-4 majority overruled 96 year old precedent (by Kennedy, J;
Justice Scalia hiding).
• Affirmed 5th
Circuit and jury verdict for terminated retailer
 Agreements to set minimum resale prices now to be tested
by Rule of Reason; no longer per se illegal
• State Oil v. Khan had blessed maximum RPM in 1997.
• Per se rule in decline since Chicago School in 1970s
 Factual setting: Failed attempt at MAP under Colgate
doctrine

11. Wilson Sonsini Goodrich & Rosati
PROFESSIONAL CORPORATION
Leegin Reasoning
 Per se rule should apply only where courts have
considerable experience with the type of restraint at issue—
i.e., where the economic impact “is immediately obvious”
and “manifestly anticompetitive.”
 Recent cases “have rejected the rationales on which Dr.
Miles was based.”
 Economic literature full of pro-competitve reasons for
vertical price restraints
• Can stimulate interbrand competition
• Give consumers more choice in price/service tradeoffs
• Stop ‘free riding” (internet sales)
• Encourage new entry in at manufacturer level

12. Wilson Sonsini Goodrich & Rosati
PROFESSIONAL CORPORATION
Leegin Dissent
 Even writing on a clean slate, the question is a close one.
• Studies suggest consumer prices will go up
• At best, economic pros and cons are unclear
 Should not overturn 96 years of precedent on uncertain economic
basis
• Scalia’s factors all argue against reversal
• Reliance by business; “turmoil” likely in the courts now
One man, two loves. No good ever comes of that. Euripides,
Andromache (426 B.C.)

13. Wilson Sonsini Goodrich & Rosati
PROFESSIONAL CORPORATION
Leegin’s Limitations
 RPM not per se legal, unlike other vertical non-price
restraints
 Most states, including California, still make RPM per se
illegal; legislative reaction coming?
• Cartwright Act expressly bars pricing restraints
• California hasn’t even yet expressly adopted Khan
• 5-4 decision and economic debate makes adoption less likely
 Still a “hard core” restraint in EU, other countries
• Even MAP programs illegal in Canada

14. Wilson Sonsini Goodrich & Rosati
PROFESSIONAL CORPORATION
Questions, Answers?

15. Wilson Sonsini Goodrich & Rosati
PROFESSIONAL CORPORATION
Charles T. (Chris) Compton
Chris plays a leadership role in the firm’s antitrust practice,
focusing on merger regulatory and intellectual property issues.
He has overseen the antitrust work in more than 900 mergers,
acquisitions, and joint ventures—many of which involved formal
investigations by the FTC, DOJ, EC, and other international
competition agencies. No Wilson Sonsini Goodrich & Rosati
transaction since 1980 has ever been blocked or abandoned due
to an antitrust challenge by the DOJ or FTC.
Named a Northern California “Super Lawyer” since 2004 , Chris
has also been cited in the 2005-07 editions of Chambers USA:
America's Top Business Lawyers and in Best Lawyers in
America, 2005-07. He also was listed as one of the “Top-
Ranking Competition Lawyers in Europe and Northern America”
(PLC, 2003-2004). Chris has written extensively and teaches an
antitrust/intellectual property course for the Santa Clara
University School of Law LL.M. program. Chris can be reached
by phone at 650-320-4882, or by email at ccompton@wsgr.com.